Self-managed super funds (SMSFs) continue to play a significant role in Australia’s retirement landscape, offering individuals greater control over how their superannuation is invested. As at March 2025, approximately 650,000 SMSFs manage over $1 trillion in assets—representing around 25% of the nation’s total superannuation pool.
For those seeking a more hands-on approach to retirement planning, SMSFs may offer a compelling alternative.
Who uses SMSFs?
SMSFs are typically favoured by individuals who want direct oversight of their retirement savings. There are around 1.2 million SMSF members, with the majority of funds (68%) comprising two members—often couples. Single-member funds account for 25%, while the remaining 7% include three to six members.
Most SMSF members are aged over 45, and the average fund holds more than $800,000 in assets, reflecting the appeal of SMSFs to those with substantial balances and long-term investment goals.
Why choose an SMSF?
The key advantage of an SMSF is control. As trustees, members can tailor their investment strategy to suit their personal objectives—whether that includes direct property investment, exposure to alternative assets, or access to unlisted investments not typically available through retail or industry funds.
SMSFs also offer transparency, tax planning opportunities, and enhanced estate planning flexibility. For example, trustees can manage the timing of asset sales to optimise tax outcomes, and implement customised binding death benefit nominations that may not be available through larger funds.
Setting up and ongoing administration
Creating an SMSF involves some paperwork but is manageable with clear steps. Working with an SMSF professional can make the process smoother and ensure everything is set up correctly. Here’s how to get started:
- Choose Your Trustee Structure: Opt for individual trustees (up to six, with all members as trustees) or a corporate trustee (members as company directors, each needing a Director Identification Number from the Australian Business Registry Service). For single-member funds, individual trustees require a second trustee, and members can’t be employees of each other unless related.
- Verify Trustee Eligibility: Ensure no trustee is bankrupt or has a dishonesty conviction.
- Create a Trust Deed: Work with a professional to draft a trust deed outlining your fund’s rules, ensuring compliance with superannuation laws.
- Establish an Australian Fund: Set up the SMSF in Australia, with management and assets based locally, to meet Australian super fund requirements.
- Register with the ATO: Within 60 days, apply for an Australian Business Number (ABN) and Tax File Number (TFN) through the Australian Taxation Office (ATO).
- Open a Bank Account: Set up a dedicated SMSF bank account to manage contributions and investments, kept separate from personal finances.
- Set Up SuperStream and Investment Strategy: Obtain an Electronic Service Address (ESA) for SuperStream compliance and develop an investment strategy tailored to your retirement goals.
SMSFs require ongoing management which includes maintaining records, filing annual tax returns and conducting audits. An SMSF professional can help you stay compliant and make the most of your fund.
Costs involved
SMSFs can involve significant administrative work and be time-consuming to manage. Professional advice and administration can increase expenses but reduce workload. Keep in mind that insurance premiums, such as life or disability cover, are typically higher in SMSFs as they do not benefit from bulk discount arrangements. Trustees can lower costs by handling some administration, requiring time and expertise.
Is an SMSF right for you?
SMSFs offer control and flexibility, ideal for those with financial literacy, time, and larger balances, as lower balances may not justify the associated costs. However, they also come with responsibilities, including the risk of potential investment losses and the need to meet compliance obligations. If you’re considering an SMSF and want to understand more about how they work, feel free to give us a call – we can help you explore whether it might be a suitable structure for your needs.
Further information
There is a lot of Information on about SMSFs but it’s hard to go past the ATO series of videos on all things SMSF. They can be found at ATO SMSF Video Series.